At the same time as Tesla (NASDAQ:TSLA) seemingly faces one setback after one other, it’s still the 800-pound elephant within the room when the conversation turns to the electrical vehicle (EV) market. Consequently, Tesla’s upcoming first-quarter 2024 earnings report will probably be a closely watched event for each the bulls and the bears.
So, mark your calendar for Tuesday, April 23, and grab some popcorn, because the earnings report ought to offer thrills, chills or each. Whilst you’re at it, consider whether it’d actually make sense to take a pre-earnings Tesla share position, as muted expectations can sometimes result in positive surprises.
It’s one problem after one other for Tesla
Speaking of muted expectations, Tesla already released its quarterly EV delivery figure earlier this month. In a shock to investors and analysts, Tesla delivered barely fewer than 387,000 vehicles in 2024’s first quarter, down roughly 9% yr over yr. Even Wall Street’s lowest estimate assumed that Tesla would have delivered around 20,000 more vehicles than that.
To view it from one other angle, Tesla sold 46,000 fewer vehicles than the corporate produced in the course of the quarter. This means two related issues for Tesla and for the industry as a complete: a vehicle supply glut and persistently soft EV demand.
At this point, there’s no denying that Tesla has serious problems. CEO Elon Musk admitted on his social platform X, “This was a troublesome quarter for everybody.”
Meanwhile, JPMorgan Chase (NYSE:JPM) analyst Ryan Brinkman stated outright that Tesla’s disappointing first-quarter EV deliveries reflected a “demand problem.”
We’ll revisit Brinkman’s commentary in a moment. It’s value noting immediately, though, that the overall tone of Tesla’s upcoming first-quarter earnings report shouldn’t be a whole mystery for the reason that automaker’s vehicle delivery figure is already public knowledge.
Besides, Wall Street isn’t expecting much from the corporate. The analysts’ consensus estimates call for Tesla to have earned 49 cents per share in 2024’s first quarter, which might represent a substantial drop-off in comparison to 71 cents per share within the prior quarter and 85 cents per share within the year-earlier quarter.
It’s also value mentioning that Tesla had 10 consecutive quarterly EPS beats before breaking that streak with EPS misses in 2023’s third and fourth quarters. Could this possibly be a setup for a not-as-bad-as-expected positive surprise on Tuesday?
That’s value considering, especially with Tesla facing one problem after one other these days. The corporate announced plans to put off greater than 10% of its staff, in what Wedbush analyst Daniel Ives called an “ominous sign” for Tesla. Moreover, two veteran Tesla executives are leaving the corporate.
Then, the market reacted negatively when Musk signaled a commitment to devote more of Tesla’s resources toward self-driving technology on the whole and robo-taxis particularly. And, in case all of that wasn’t enough, Tesla hit yet one more speed bump when the automaker announced a recall of its odd-shaped Cybertruck on account of a difficulty with the vehicle’s accelerator pedal.
The recall only applies to three,878 Cybertrucks, however the cumulative effect of bad news upon bad news has sent the Tesla share price to fresh short-term lows. Already, TSLA stock has declined around 40% yr to this point.
Two pessimistic Tesla stock price targets
Now, let’s circle back to Brinkman, the JPMorgan analyst. He recently lowered his Tesla share-price goal from $130 to $115, while assigning a Sell rating to the stock.
Even after the share-price rout, Brinkman warned that TSLA stock “could fall much further still” if Tesla’s vehicle volume and sales growth don’t improve quickly. Together with that, the JPMorgan analyst feels that Tesla’s aforementioned planned layoffs debunk the corporate’s “hypergrowth narrative.”
$TSLA
❖ TESLA LAYOFFS SHOW DELIVERY MISS ABOUT DEMAND, NOT SUPPLY, SAYS JPMORGAN
JPMorgan analyst Ryan Brinkman says Tesla’s announcement yesterday that it will conduct its largest ever layoffs, amounting to greater than 10% of its global workforce, should “firmly dispel the…
— *Walter Bloomberg (@DeItaone) April 16, 2024
Brinkman won’t be Tesla’s most devoted bear, though. Not way back, Deutsche Bank (NYSE:DB) analyst Emmanuel Rosner slashed his Tesla stock price goal from an already pessimistic $123 to simply $89. That will represent an enormous drop from today’s Tesla share price of around $150.
Rosner is anxious about Tesla allocating substantial resources toward robo-taxis. That concern is comprehensible, to a certain extent, since robo-taxis are an early-stage, untested market.
But then, Musk and Tesla didn’t get to where they’re today by playing it secure. It’s too soon, I’d say, for investors to declare Musk’s robo-taxi vision a failure, because it really hasn’t even begun in earnest.
That’s a long-term consideration, nonetheless. For the immediate future, daring investors could also be willing to bet on prevalent pessimism, flipping to widespread post-earnings optimism. All it will take is for Tesla to post quarterly financial results which are at the least decent, if not ideal.